SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
-----------------------
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
(Name of Subject Company)
MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL
FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; MACKENZIE PATTERSON
SPECIAL FUND 4, LLC; and CAL KAN, INC.
(Bidders)
DEPOSITARY UNIT CERTIFICATES
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
Christine Simpson Paul J. Derenthal, Esq.
MacKenzie Patterson, Inc. Derenthal & Dannhauser
1640 School Street One Post Street, Suite 575
Moraga, California 94556 San Francisco, California 94104
(925) 631-9100 (415) 981-4844
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
$916,500 $183.30
* For purposes of calculating the filing fee only. Assumes the
purchase of 183,300 Depositary Unit Certificates ("Units") at a
purchase price equal to $5.00 per Unit in cash.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
Amount Previously Paid:
Form or Registration Number:
Filing Party:
Date Filed:
<PAGE>
CUSIP NO. None 14D-1 Page 2 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MP VALUE FUND 4, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 3 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MP VALUE FUND 6, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 4 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MACKENZIE PATTERSON SPECIAL FUND, L.P.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
PN
<PAGE>
CUSIP NO. None 14D-1 Page 5 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MACKENZIE PATTERSON SPECIAL FUND 3, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 6 of ___ Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MACKENZIE PATTERSON SPECIAL FUND 4, LLC
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
California
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
OO
<PAGE>
CUSIP NO. None 14D-1 Page 7 of ___ Pages
--------
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
CAL KAN, INC.
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) __
(b) x
3. SEC Use Only
4. Sources of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
--
6. Citizenship or Place of Organization
Kansas
7. Aggregate Amount Beneficially Owned by Each Reporting Person 61,000
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
--
9. Percent of Class Represented by Amount in Row (7) 4.9%
10. Type of Reporting Person (See Instructions)
CO
<PAGE>
Item 1. Security and Subject Company.
(a) This Schedule relates to Depositary Unit Certificates of
limited partnership interest (the "Units") in U.S. Realty Partners Limited
Partnership, a South Carolina limited partnership (the "Issuer"), the subject
company. The address of the Issuer's principal executive offices is 55 Beattie
Place, P.O. Box 1089, Greenville, South Carolina 29602.
(b) This Schedule relates to the offer by MP VALUE FUND 4, L.P.; MP
VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND, L.P.; MACKENZIE PATTERSON
SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC.
(collectively the "Purchasers") to purchase up to 183,300 Units at a purchase
price equal to $5.00 per Unit, less the amount of any distributions declared or
made with respect to the Units between March 25, 1999 (the "Offer Date") and
April 29, 1999, or such other date to which this Offer may be extended (the
"Expiration Date"), upon the terms and subject to the conditions set forth in
the Offer to Purchase dated March 25, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. The Issuer had 1,222,000 Units issued and
outstanding held by approximately2,033 Unit holders as of December 31, 1997,
according to its annual report on Form 10-K for the year then ended.
(c) The information set forth under the captions "Introduction -
Establishment of the Offer Price" and "Effects of the Offer" in the Offer to
Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in "Introduction," "Certain
Information Concerning the Purchasers" and in Schedule I and the Addendum of the
Offer to Purchase is incorporated herein by reference.
(e)-(g) The information set forth in "Certain Information
Concerning the Purchasers" and Schedule I and the Addendum in the Offer to
Purchase is incorporated herein by reference. During the last five years,
neither the Purchasers nor, to the best of the knowledge of the Purchasers, any
person named on Schedule I and the Addendum to the Offer to Purchaser nor any
affiliate of the Purchasers (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a)-(b) See the discussion under the caption "Certain Information
Concerning the Purchasers" in the Offer to Purchase for information concerning
purchases of Units by certain of the Purchasers and their affiliates. Other than
the foregoing, since January 1, 1996, there have been no transactions between
any of the persons identified in Item 2 and the Issuer or, to the knowledge of
the Purchaser, any of the Issuer's affiliates or general partner, or any
directors or executive officers of any such affiliates or general partner.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth under the caption "Source of Funds"
of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a) - (g) The information set forth under the caption "Future
Plans" in the Offer to Purchase is incorporated herein by reference. Other than
as set forth therein, the Purchasers have no plans or proposals that would
relate to or would result in any of the transactions, changes or other results
described in Item 5(a) through (g) of Schedule 14D-1.
(f) Not applicable.
8
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in "Certain Information
Concerning the Purchasers" of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in "Certain Information Concerning the
Purchasers" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or To Be Compensated.
None.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in "Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
(d) None.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and which are incorporated herein in their
entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated March 25, 1999
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unit holders dated March 25, 1999
(a)(4) Advertisement dated March 25, 1999
(b)-(f) Not applicable.
9
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 25, 1999
MP VALUE FUND 4, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ Christine Simpson
Christine Simpson, Vice President
MP VALUE FUND 6, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ Christine Simpson
Christine Simpson, Vice President
MACKENZIE PATTERSON SPECIAL FUND, L.P.
By MacKenzie Patterson, Inc., General Partner
By: /s/ Christine Simpson
Christine Simpson, Vice President
MACKENZIE PATTERSON SPECIAL FUND 3, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ Christine Simpson
Christine Simpson, Vice President
MACKENZIE PATTERSON SPECIAL FUND 4, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ Christine Simpson
Christine Simpson, Vice President
CAL KAN, INC.
By: /s/ Christine Simpson
Christine Simpson, Vice President
10
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Offer to Purchase dated March 25, 1999
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unit holders dated March 11, 1999
(a)(4) Advertisement dated March 25, 1999
11
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 183,300
DEPOSITARY UNIT CERTIFICATES OF LIMITED PARTNERSHIP INTEREST
OF
U.S. REALTY PARTNERS LIMITED PARTNERSHIP
AT
$5.00 PER UNIT
MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON
SPECIAL FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE
AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON APRIL 29, 1999,
UNLESS THE OFFER IS EXTENDED.
MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL
FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL
FUND 4, LLC; and CAL KAN, INC (collectively the "Purchasers") hereby seek to
acquire Depositary Unit Certificates of limited partnership interests (the
"Units") in U.S. REALTY PARTNERS LIMITED PARTNERSHIP, a South Carolina limited
partnership (the "Partnership"). The Purchasers are not affiliated with the
Partnership or its general partner. The Purchasers hereby offer to purchase up
to 183,300 Units at a purchase price equal to $5.00 per Unit, less the amount of
any distributions declared or made with respect to the Units between March 25,
1999 (the "Offer Date") and April 29, 1999, or such other date to which this
Offer may be extended (the "Expiration Date"), in cash, without interest, upon
the terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the related Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). The 183,300 Units sought pursuant to the Offer represent approximately
15% of the Units outstanding as of December 31, 1997. One of the Purchasers and
another affiliate of the Purchasers currently own a total of 61,000 Units or
approximately 4.9% of the total outstanding Units. If all of the Units sought
hereunder are purchased, the Purchasers would hold a total of approximately 20%
of the outstanding Units.
Holders of Units ("Unit holders") are urged to consider the following factors:
- Unit holders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future
distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unit holder by the
Purchasers may be less than the total amount which might
otherwise be received by the Unit holder with respect to
the Unit over the remaining term of the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the
ownership of the Units. In establishing the purchase price
of $5.00 per Unit, the Purchasers are motivated to
establish the lowest price which might be acceptable to
Unit holders consistent with the Purchasers' objectives.
1
<PAGE>
There is no public market for the Units, and neither the
Unit holders nor the Purchasers have any accurate means for
determining the actual present value of the Units. Although
there can be no certainty as to the actual present value of
the Units, the Purchasers have estimated, solely for the
purposes of determining an acceptable Offer price, that
the Units could have an estimated value of approximately
$5.83 per Unit. It should be noted, however, that the
Purchasers have not made an independent appraisal of the
Units or the Partnership's properties, and are not
qualified to appraise real estate. Accordingly, there can
be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not
vary substantially from this estimate.
- As a result of consummation of the Offer, the Purchaser may
be in a position to significantly influence all Partnership
decisions on which Unit holders may vote. The Purchaser
will vote the Units acquired in the Offer in its own
interest, which may be different from or in conflict with
the interests of the remaining Unit holders.
- The Purchasers may accept only a portion of the Units
tendered by a Unit holder in the event a total of more than
183,300 Units are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 183,300 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 183,300 UNITS FROM TENDERING UNIT HOLDERS ON
A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNIT HOLDER MAY
TENDER ANY OR ALL UNITS OWNED BY SUCH UNIT HOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unit holders in a manner reasonably designed to inform Unit
holders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
March 25, 1999
2
<PAGE>
IMPORTANT
Any Unit holder desiring to tender any or all of such Unit holder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on green paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile Transmission: 925-631-9119
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 of the General Rules
and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. Such statement and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner specified above.
3
<PAGE>
TABLE OF CONTENT
Page
INTRODUCTION...................................................................6
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units......9
Section 3. Procedures for Tendering Units..............................11
Section 4. Withdrawal Rights...........................................12
Section 5. Extension of Tender Period; Termination; Amendment..........13
Section 6. Certain Federal Income Tax Consequences.....................14
Section 7. Effects of the Offer........................................16
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................17
Section 10. Conflicts of Interest.......................................18
Section 11. Certain Information Concerning the Purchasers...............18
Section 12. Source of Funds.............................................19
Section 13. Conditions of the Offer.....................................19
Section 14. Certain Legal Matters.......................................21
Section 15. Fees and Expenses...........................................22
Section 16. Miscellaneous...............................................22
Schedule I - The Purchasers and Their Respective Principals
4
<PAGE>
To the Unit holders of U.S. REALTY PARTNERS LIMITED PARTNERSHIP
INTRODUCTION
The Purchasers hereby offer to purchase up to 183,300 Units at a
purchase price of $5.00 per Unit, less the amount of any distributions declared
or paid with respect to the Units between the Offer Date and the Expiration Date
("Offer Price"), in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer. Unit holders who tender their Units will not
be obligated to pay any Partnership transfer fees, or any other fees, expenses
or commissions in connection with the tender of Units. The Purchasers will pay
all such costs and all charges and expenses of the Depositary, an affiliate of
certain of the Purchasers, as depositary in connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
None of the Purchasers nor the Depositary is affiliated with U.S.
Realty I Corporation, the Partnership's corporate general partner (the "General
Partner"), or with any affiliate of such person.
Unit holders are urged to consider the following factors:
- Unit holders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unit holder by the Purchasers may be less than the
total amount which might otherwise be received by the Unit
holder with respect to the Unit over the remaining term of the
Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $5.00 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unit holders consistent
with the Purchasers' objectives. There is no public market for
the Units, and neither the Unit holders nor the Purchasers
have any accurate means for determining the actual present
value of the Units. Although there can be no certainty as to
the actual present value of the Units, the Purchasers have
estimated, solely for the purposes of determining an
acceptable Offer price, that the Units could have an estimated
value of $5.83 per Unit. It should be noted, however, that the
Purchasers have not made an independent appraisal of the Units
or the Partnership's properties, and are not qualified to
appraise real estate. Accordingly, there can be no assurance
that this estimate accurately reflects an approximate value of
the Units or that the actual amounts which may be realized by
holders for the Units may not vary substantially from this
estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unit holders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests
of the remaining Unit holders.
- The Purchasers may accept only a portion of the Units tendered
by a Unit holder in the event a total of more than 183,300
Units are tendered.
5
<PAGE>
The Offer will provide Unit holders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unit holders may have a more immediate need to use the cash now tied up
in an investment in the Units and wish to sell them to the Purchasers. Unit
holders who sell all of their Units will also eliminate the need to file form
K-1 information with their federal tax returns for years after 1999.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $5.00 per Unit, less the
amount of any distributions declared or made with respect to the Units between
the Offer Date and Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors,
including:(i) the lack of a secondary market for resales of the Units and the
resulting lack of liquidity of an investment in the Partnership; (ii) the
estimated value of the Partnership's real estate assets; and (iii) the costs to
the Purchasers associated with acquiring the Units.
The Partnership stated in its annual report on Form 10-K for the year
ended December 31, 1997, "Due to the security being delisted during 1990, no
public trading market has developed and it is not anticipated that such a market
will develop in the future." The lack of any public market for the sale of Units
means that Unit holders have limited alternatives if they seek to sell their
Units. As a result of such limited alternatives for Unit holders, the Purchasers
may not need to offer as high a price for the Units as they would otherwise. On
the other hand, the Purchasers take a greater risk in establishing a purchase
price as there is no prevailing market price to be used for reference and the
Purchasers themselves will have limited liquidity for the Units upon
consummation of the purchase. One of the Purchasers, MP Value Fund 4, LLC,
purchased 27,000 Units in an individually negotiated transaction on March 29,
1998 at a price of $3.68 per Unit, and another affiliate of the Purchasers
acquired a total of 34,000 Units in individual transactions at the same price on
the same date. The Purchasers and their affiliates therefore beneficially own a
total of 61,000 Units or approximately 4.9% of the total outstanding Units.
The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The assets of the Partnership may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Partnership is only one
factor used by the Purchasers in arriving at the Offer Price. However, in the
absence of trading price information, the Purchasers estimate of the net asset
value of the Partnership may be relevant to Unit holders review of the Offer
Price. Using publicly available information concerning the Partnership contained
in the Partnership's Form 10-K for the fiscal year ended December 31, 1997, and
the quarterly report on Form 10-Q for the quarter ended September 30, 1998, the
Purchasers derived an estimated net asset value for the Units. The Purchasers
are not qualified as real estate appraisers and have relied solely on publicly
available information in making their estimate of the value of the Partnership's
assets. Their estimated value of Partnership assets was calculated solely for
purposes of formulating their offer and cannot be relied upon as representing an
amount which might actually be realized upon a liquidation of the Partnership's
assets, whether now or at any time in the future.
In determining their estimated value of the Units, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's real properties.
The Estimated Net Sales Value was determined by first determining the
properties' net operating income ("NOI"). The NOI was calculated by subtracting
from rental income the cost of rental income, general and administrative costs,
6
<PAGE>
and an estimate of anticipated near-term capital expenditures, and then
adding back to that sum the partnership administrative costs. This NOI was then
divided by a 10% capitalization rate (the "Cap Rate") and the result reduced by
(i) 3% to take into account the estimated closing costs which would be incurred
upon sale by the Partnership of the property, including brokerage commissions,
title costs, surveys, appraisals, legal fees and transfer taxes, and (ii) the
mortgage debt encumbering the property.
The Purchasers believe that the Cap Rate utilized is within a range of
capitalization rates currently employed in the marketplace for properties of
similar type, age and quality. The utilization of different capitalization
rates, however, could also be appropriate. In this regard, Unit holders should
be aware that the use of lower capitalization rate would result in a higher
Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's properties the a net current assets as reported in the
Partnership's most recent Form 10-K. The resulting Estimated Liquidation Value
of the Partnership's assets was approximately $5.83 per Unit. The Purchasers
emphasize that this value was calculated by them solely for purposes of
calculating the Offer Price. There can be no assurance as to the actual
liquidation value of Partnership assets or as to the amount or timing of
distributions of liquidation proceeds which may be received by Unit holders.
The Partnership owns interests in three real properties, The Gallery, a
retail property in Huntsville, Alabama with approximately 101,000 square feet;
The Governor's Park Apartments, a 154-unit apartment complex in Little Rock,
Arkansas; and Twin Lakes Apartments, a 262-unit apartment complex in Palm
Harbor, Florida. The Partnership reported that it sold another of its investment
properties, The Gallery Shopping Center, located in Knox County, Tennessee on
February 1, 1999. According to the Partnership, the entire net proceeds of the
sale were used to pay down the first mortgage indebtedness which secured the
property as well as the Partnership's other properties. Accordingly, it
indicated that there are no net proceeds to be distributed to the Unit holders.
The Partnership has reported no distributions made to partners in 1998, 1997 or
1996. Under the Partnership Agreement, the Partnership is not required to sell
its properties until the earlier of the date Unit holders holding a majority of
the Units vote to liquidate the Partnership or December 31, 2005. Accordingly,
the timing of the sale of Partnership's properties and resulting liquidation of
the Partnership remains uncertain, and, consequently, the timing of amounts to
be received by Unit holders in respect of such sale and liquidation cannot be
determined.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unit holders. Unit holders are urged to consider carefully all of the
information contained herein and consult with their own advisors, tax, financial
or otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
7
<PAGE>
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 1,222,000 Units
issued and outstanding held by approximately 2,033 Unit holders at December 31,
1997.
Tendering Unit holders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unit holder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unit holders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on April 29, 1998, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unit holders, (ii) waive all the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right of
Unit holders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
8
<PAGE>
Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of Units validly tendered prior to the Expiration Date and not withdrawn
is 183,300 or less, the Purchasers, upon the terms and subject to the conditions
of the Offer, will accept for payment all Units so tendered. If the number of
Units validly tendered prior to the Expiration Date and not withdrawn exceeds
183,300, the Purchasers, upon the terms and subject to the conditions of the
Offer, will accept for payment Units so tendered on a pro rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchasers will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unit holders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unit holders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unit holders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unit holders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
9
<PAGE>
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on green paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unit holder may tender any or all Units owned by such Unit
holder.
In order for a tendering Unit holder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 12:00 midnight, Pacific Standard Time, on April 29, 1998, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit holder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unit holder must
provide the Depositary with such Unit holder's correct taxpayer identification
number and make certain certifications that such Unit holder is not subject to
backup federal income tax withholding. Each tendering Unit holder must insert in
the Letter of Transmittal the Unit holder's taxpayer identification number or
social security number in the space provided on the front of the Letter of
Transmittal. The Letter of Transmittal also includes a substitute Form W-9,
which contains the certifications referred to above. (See the Instructions to
the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unit holder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such Unit
holder's taxpayer identification number and address and that the Unit holder is
not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unit holder irrevocably appoints the designees of the Purchasers as
such Unit holder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unit holder's rights with respect to the Units tendered by such Unit holder and
accepted for payment by the Purchasers. Such appointment will be effective when,
and only to the extent that, the Purchasers accept such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unit holder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchasers will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unit holder as they in their sole
discretion may deem proper at any meeting of Unit holders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unit holder also
assigns to the Purchasers all of the Unit holder's rights to receive
distributions from the Partnership with respect to Units which are accepted for
payment and purchased pursuant to the Offer, other than those distributions
declared or paid during the period commencing on the Offer Date and terminating
on the Expiration Date.
10
<PAGE>
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the procedures described above will be determined by the
Purchasers, in their sole discretion, which determination shall be final and
binding. The Purchasers reserve the absolute right to reject any or all tenders
if not in proper form or if the acceptance of, or payment for, the absolute
right to reject any or all tenders if not in proper form or if the acceptance
of, or payment for, the Units tendered may, in the opinion of the Purchasers'
counsel, be unlawful. The Purchasers also reserve the right to waive any defect
or irregularity in any tender with respect to any particular Units of any
particular Unit holder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unit holder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unit holder's representation and warranty that (i) such Unit
holder owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unit holders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after May 24, 1999.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unit holders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
11
<PAGE>
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
giving oral or written notice of such extension to the Depositary, (ii) upon the
occurrence or failure to occur of any of the conditions specified in Section 13,
to delay the acceptance for payment of, or payment for, any Units not heretofore
accepted for payment or paid for, or to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, by giving
oral or written notice of such termination to the Depositary, and (iii) to amend
the Offer in any respect (including, without limitation, by increasing or
decreasing the consideration offered or the number of Units being sought in the
Offer or both or changing the type of consideration) by giving oral or written
notice of such amendment to the Depositary. Any extension, termination or
amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., Eastern Standard Time, on the next business day after the previously
scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unit holders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unit holders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
12
<PAGE>
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNIT HOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unit holders (including trusts, foreign persons,
tax-exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNIT HOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNIT HOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNIT HOLDER OF ACCEPTING THE OFFER,
INCLUDING THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unit holder will recognize a gain or loss on the sale of
such Unit holder's Units in an amount equal to the difference between (i) the
amount realized by such Unit holder on the sale and (ii) such Unit holder's
adjusted tax basis in the Units sold. The amount realized by a Unit holder will
include the Unit holder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the Unit
holder reports a loss on the sale, such loss generally could not be currently
deducted by such Unit holder except against such Unit holder's capital gains
from other investments. In addition, such loss would be treated as a passive
activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unit holder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unit holder who plans to tender hereunder should consult with the
Unit holder's own tax advisor as to the Unit holder's adjusted tax basis in the
Unit holder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unit holder is attributable
to such Unit holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unit holder's gain or loss will be treated as ordinary gain or
13
<PAGE>
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit holder's recognizing ordinary income with respect to the
portion of the Unit holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
A tax-exempt Unit holder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unit holder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unit holder will be
allocated the Unit holder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unit holder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unit holder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unit holder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets to the Unit holders, the partners of the
Partnership after consummation of the Offer (i.e., the non-tendering Unit
holders and the Purchasers) would be treated as having re-contributed their
interests in Partnership assets to the Partnership, and the capital accounts of
all partners would be restated. A Unit holder would recognize gain on the
liquidating distribution only to the extent that the amount of cash deemed
distributed to the Unit holder exceeded the Unit holder's basis in the Units.
Depending on the Unit holders' bases in their Units and the Partnership's tax
basis in its property, a tax termination could affect, perhaps adversely, the
amount of depreciation deductions reported by the Partnership for the period
following the date of such termination. A tax termination of the Partnership
also could have the adverse effect on Unit holders whose tax year is not the
calendar year, of the inclusion of more than one year of Partnership tax items
in one tax return of such Unit holders, resulting in a "bunching" of income. In
addition, a tax termination could have the adverse effect on non-tendering Unit
holders who subsequently dispose of their Units at a gain of requiring them to
treat a greater portion of such gain as ordinary income (due to the application
of Code Section 735) than would otherwise be required absent a tax termination
of the Partnership.
Suspended "Passive Activity Losses". A Unit holder who sells all of the Unit
holder's Units would be able to deduct "suspended" passive activity losses from
the Partnership, if any, in the year of sale free of the passive activity loss
limitation. As a limited partner of the Partnership, which was engaged in real
estate activities, the ability of a Unit holder, who or which is subject to the
passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unit holder's Units, such Unit holder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unit holder's Units and then against income from any other
source.
14
<PAGE>
Foreign Unit holders. Gain realized by a foreign Unit holder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unit holder from the purchase price payment to be made
to such Unit holder unless the Unit holder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal certifying the
Unit holder's TIN, that such Unit holder is not a foreign person and the Unit
holder's address. Amounts withheld would be creditable against a foreign Unit
holder's federal income tax liability and, if in excess thereof, a refund could
be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units.
Effect on Trading Market. There is no established public trading market for the
Units and, therefore, a reduction in the number of Unit holders should not
materially further restrict the Unit holders' ability to find purchasers for
their Units on any secondary market.
Voting Power of Purchasers. Depending on the number of Units acquired by the
Purchasers pursuant to the Offer, the Purchasers may have the ability to exert
certain influence on matters subject to the vote of Unit holders, though the
maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unit holders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from, Unit
holders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported a total of 2,033 limited partners and
total assets of over $24 million as of its most recent fiscal year end.
Accordingly, the Purchasers do not believe that the purchase of Units pursuant
to the Offer will result in the Units becoming eligible for de-registration
under the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to purchase a total
of 183,300 Units. If the Purchasers acquire fewer than 183,300 Units pursuant to
the Offer, the Purchasers may seek to make further purchases on the open market
at prevailing prices, or solicit Units pursuant to one or more future tender
offers at the same price, a higher price or, if the Partnership's circumstances
change, at a lower price. Alternatively, the Purchasers may discontinue any
further purchases of Units after termination of the Offer, regardless of the
number of Units purchased.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Partnership or to change the management or operations of the Partnership.
15
<PAGE>
The Purchasers do not have any present intention to seek or cause a liquidation
of the Partnership. The Purchasers nevertheless reserve the right, at an
appropriate time, to exercise their rights as limited partners to vote on
matters subject to a limited partner vote, including, but not limited to, any
vote to cause the sale of the Partnership's properties and the liquidation and
dissolution of the Partnership.
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Information concerning the Partnership, its assets, operations and
management is contained in its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q and other filings with the Securities and Exchange Commission. Such
reports and filings are available on the Commission's EDGAR system, at its
internet website at www.sec.gov, and are available for inspection at the
Commission's principal office in Washington, D.C. and at its regional offices in
New York, New York and Chicago, Illinois. The Purchasers have relied on such
information to the extent information is presented herein concerning the
Partnership, and expressly disclaim any responsibility for the information
included in such reports and extracted in this Offer.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are MP
VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND,
L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; MACKENZIE PATTERSON SPECIAL FUND
4, LLC; and CAL KAN, INC. For information concerning the Purchasers and their
respective principals, please refer to Schedule I attached hereto. The principal
business of each of the entity Purchasers is investment in securities,
particularly real estate-based securities. The principal business address of
each of the Purchasers is 1640 School Street, Moraga, California 94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid capital necessary to fund the acquisition
of all Units subject to the Offer, the expenses to be incurred in connection
with the Offer, and all other anticipated costs of the Purchasers. The
Purchasers are not public companies and have not prepared audited financial
statements. The Purchasers, their general partners, owners, managers and members
have an aggregate net worth in excess of $15 million, including net liquid
assets of more than $5 million.
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
16
<PAGE>
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Section 12. Source of Funds. The Purchasers expect that approximately
$916,500 would be required to purchase 183,300 Units, if tendered, and an
additional $15,000 may be required to pay related fees and expenses. The
Purchasers anticipate funding all of the purchase price and related expenses
through their existing liquid capital reserves.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
any Units tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unit holders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer or (v) might materially adversely
affect the business, properties, assets, liabilities, financial condition,
operations, results of operations or prospectus of the Purchasers or the
Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
17
<PAGE>
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or may have
a material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchasers concerning the events described above will be final and binding upon
all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
18
<PAGE>
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the regulations
of the Board of Governors of the Federal Reserve System and, accordingly, such
regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any
anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchasers might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson,
Inc., an affiliate of certain Purchasers, to act as Depositary in connection
with the Offer. The Purchasers will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchasers will also pay all costs and expenses
of printing, publication and mailing of the Offer and all costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNIT HOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
March 25, 1999
MP VALUE FUND 4, L.P.;
MP VALUE FUND 6, LLC;
MACKENZIE PATTERSON SPECIAL FUND, L.P.;
MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and
CAL KAN, INC
19
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC;
MACKENZIE PATTERSON SPECIAL FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC. The Managing Member
or Manager of MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; and
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and the general partner of each of MP
VALUE FUND 4, L.P.; and MACKENZIE PATTERSON SPECIAL FUND, L.P.; is MacKenzie
Patterson, Inc. The names of the directors and executive officers of MacKenzie
Patterson, Inc. and Cal Kan, Inc. and the present principal occupations and five
year employment histories of each such person are set forth below. The
Purchasers have jointly made the offer and are jointly and severally liable for
satisfying its terms. Other than common management, the Purchasers' relationship
consists of an understanding that they will share the costs associated with
making the offer and agree to allocate any resulting purchases of Units among
them in such manner and proportions as they may determine in the future. Each
individual is a citizen of the United States of America. Each of MP VALUE FUND
6, LLC; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; and MACKENZIE PATTERSON SPECIAL
FUND 4, LLC is a California limited liability company; and MP VALUE FUND 4,
L.P.; and MACKENZIE PATTERSON SPECIAL FUND, L.P. is each a California limited
partnership. Cal Kan, Inc. is a Kansas corporation.
MacKenzie Patterson, Inc.
C.E. Patterson is President of MacKenzie Patterson, Inc. He is the
co-founder and President of Patterson Financial Services, Inc. In 1981, Mr.
Patterson founded PFS with Berniece A. Patterson, as a financial planning firm.
Mr. Patterson founded Patterson Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of PFS, Mr. Patterson is responsible for
investment counseling activities and supervising the analysis of investment
opportunities for the clients of the firm. He is a trustee of Consolidated
Capital Properties Trust, a liquidating trust formed out of the bankruptcy court
proceedings involving Consolidated Capital Properties, Ltd. Mr. Patterson is
also an officer and controlling shareholder of Cal Kan, Inc., an executive
officer and controlling shareholder of Moraga Partners, Inc., and trustee of the
Pat Patterson Western Securities, Inc. Profit Sharing Plan. Mr. Patterson,
through his affiliates, manages a number of investment and real estate
partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
Victoriaann Tacheira is senior vice president of MacKenzie Patterson, Inc.,
which she joined in 1988. Ms. Tacheira has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General Securities Principal. She
is president and owner of North Coast Securities Corporation. Ms. Tacheira has
been certified by the College of Financial Planning in Denver, Colorado, as a
Financial ParaPlanner. 32
20
<PAGE>
Christine Simpson is vice president of MacKenzie Patterson, Inc. and is
responsible for the day-to-day management of research, and securities purchases
and sales on behalf of the entities managed by MacKenzie Patterson, Inc. Ms.
Simpson has been employed by MacKenzie Patterson, Inc. since 1990.
Cal Kan, Inc.
Cal Kan, Inc. is a Kansas corporation owned by C. E. Patterson and Thomas
A. Frame. Mr. Patterson and Mr. Frame are also each an executive officer and
director of Cal Kan, Inc. Information regarding Mr. Patterson is set forth
above.
Thomas A. Frame has been the president of Paradigm Investment
Corporation, a real estate limited partnership secondary market firm, since
1986. In 1973, Mr. Frame was a co-founder of Transcentury Real Estate Masters,
Oakland, California, a residential and commercial real estate brokerage firm. In
1973 he also co-founded, and has since then been a partner in, Transcentury
Property Management Company, which as syndicated privately-placed real estate
limited partnerships owning multi-family residential properties. He is a trustee
of Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Frame is co-owner and an executive officer and director of Cal Kan, Inc. Mr.
Frame, through his affiliates, manages over $6 million dollars in investor
capital and is currently managing a total of 1,150 residential units in four
states.
21
Exhibit (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON
APRIL 29, 1999 (THE "EXPIRATION DATE") UNLESS EXTENDED.
Deliver to: MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Via Facsimile: (925) 631-9119
For assistance: (800) 854-8357
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE
ADDRESS PRINTED TO THE LEFT)
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth above does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering Unit
holder. Please use the pre-addressed, postage-paid envelope provided.
This Letter of Transmittal is to be completed by holders of Units of
limited partnership interest in U.S. REALTY PARTNERS LIMITED PARTNERSHIP, a
South Carolina limited partnership (the "Partnership"), pursuant to the
procedures set forth in the Offer to Purchase (as defined below). Capitalized
terms used herein and not defined herein have the meanings ascribed to such
terms in the Offer to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to MP VALUE FUND 4, L.P.; MP VALUE FUND 6,
LLC; MACKENZIE PATTERSON SPECIAL FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3,
LLC; MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC. (collectively
the "Purchasers") all of the Depositary Unit Certificates of limited partnership
interest ("Units") in the Partnership held by the undersigned as set forth above
(or, if less than all such Units, the number set forth below in the signature
box), at a purchase price equal to $5.00 per Unit, less the amount of any
distributions made or declared with respect to the Units between the Offer Date
and the Expiration Date, and upon the other terms and subject to the conditions
set forth in the Offer to Purchase, dated March 25, 1999 (the "Offer to
Purchase") and in this Letter of Transmittal, as each may be supplemented or
amended from time to time (which together constitute the "Offer"). Receipt of
the Offer to Purchase is hereby acknowledged. The undersigned recognizes that,
if more than 183,300 Units are validly tendered prior to or on the Expiration
Date and not properly withdrawn, the Purchasers will, upon the terms of the
Offer, accept for payment from among those Units tendered prior to or on the
Expiration Date 183,300 Units on a pro rata basis, with adjustments to avoid
purchases of certain fractional Units, based upon the number of Units validly
tendered prior to the Expiration Date and not withdrawn. Subject to and
effective upon acceptance for payment of any of the Units tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchasers all right, title and interest in and to such Units which are
purchased pursuant to the Offer. The undersigned hereby irrevocably constitutes
and appoints the Purchasers as the true and lawful agent and attorney-in-fact
and proxy of the undersigned with respect to such Units, with full power of
1
<PAGE>
substitution (such power of attorney and proxy being deemed to be an irrevocable
power and proxy coupled with an interest), to deliver such Units and transfer
ownership of such Units, on the books of the Partnership, together with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchasers and, upon payment of the purchase price in respect of such Units by
the Purchasers, to exercise all voting rights and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units all in
accordance with the terms of the Offer. Subject to and effective upon the
purchase of any Units tendered hereby, the undersigned hereby requests that each
of the Purchasers be admitted to the Partnership as a "substitute Limited
Partner" under the terms of the Partnership Agreement of the Partnership. Upon
the purchase of Units pursuant to the Offer, all prior proxies and consents
given by the undersigned with respect to such Units will be revoked and no
subsequent proxies or consents may be given (and if given will not be deemed
effective). In addition, by executing this Letter of Transmittal, the
undersigned assigns to the Purchasers all of the undersigned's rights to receive
distributions from the Partnership with respect to Units which are purchased
pursuant to the Offer, other than distributions declared or paid through the
Expiration Date and to change the address of record for such distributions on
the books of the Partnership. Upon request, the Seller will execute and deliver,
and irrevocably directs any custodian to execute and deliver, any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
assignment, transfer and purchase of such Units.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchasers, the Purchasers will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
The undersigned understands that a tender of Units to the Purchasers will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchasers to effect a change of distribution address to
MacKenzie Patterson, Inc. at 1640 School Street, Moraga, California, 94556. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchasers may not be required to accept for payment any of the
Units tendered hereby. In such event, the undersigned understands that any
Letter of Transmittal for Units not accepted for payment will be destroyed by
the Purchasers. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
===============================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
===============================================================================
- ----------------------------------------------------------------------------
Please sign exactly as your name is printed (or corrected) above, and insert
your Taxpayer Identification Number or Social Security Number in
the space provided below your X_______________________________
signature. For joint owners, (Signature of Owner) Date
each joint owner must sign.
(See Instructions 1) The
signatory hereto hereby certifies X_______________________________
under penalties of perjury the (Signature of Owner) Date
statements in Box B, Box C and,
if applicable, Box D. If the
undersigned is tendering less Taxpayer I.D. or Social # _____________
than all Units held, the number Telephone No. (day) __________
of Units tendered is set forth (eve.)__________
_____ Initial here if no certificate
below. Otherwise, all Units held for Units.
by the undersigned are tendered hereby.
______________ Units
2
<PAGE>
=============================================================================
BOX A
=============================================================================
Medallion Signature Guarantee
(Required for all Sellers)
(See Instruction 1)
Name and Address of Eligible Institution: ____________________________________
Authorized Signature _____________________________ Title _________________
Name ________________________________ Date _______________,199___
===============================================================================
===============================================================================
BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
- -------------------------------------------------------------------------------
The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Unit holder, or if this box
[ ] is checked, the Unit holder has applied for a TIN. If the Unit holder has
applied for a TIN, a TIN has not been issued to the Unit holder, and either: (a)
the Unit holder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the Unit
holder intends to mail or deliver an application in the near future (it being
understood that if the Unit holder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unit holder
thereafter will be withheld until a TIN is provided to the Purchasers); and
(ii) Unless this box [ ] is checked, the Unit holder is not
subject to backup withholding either because the Unit holder: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Unit holder is
subject to backup withholding as result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unit holder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify
that the Unit holder is not subject to backup withholding.
===============================================================================
===============================================================================
BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
- -------------------------------------------------------------------------------
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchasers that no withholding is
3
<PAGE>
required with respect to the Unit holder's interest in the Partnership, the
person signing this Letter of Transmittal hereby certifies the following under
penalties of perjury;
(i) Unless this box [ ] is checked, the Unit holder, if an
individual, is a U.S. citizen or a resident alien for purposes of U.S.
income taxation, and if other than an individual, is not a foreign corporation,
foreign partnership, foreign estate or foreign trust (as those terms are defined
in the Internal Revenue Code and Income Tax Regulations); (ii) the Unit holder's
U.S. social security number (for individuals) or employer identification number
(for non-individuals) is correctly printed in the signature box on the front of
this Letter of Transmittal; and (iii) the Unit holder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is ----------.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
===============================================================================
===============================================================================
BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
- -------------------------------------------------------------------------------
By checking this box [ ], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the Unit holder is an "exempt
foreign person" for purposes of the backup withholding rules under the U.S.
federal income tax laws, because the Unit holder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a
broker or barter exchange.
===============================================================================
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unit holder
must sign at the "X" on the bottom of the first page of this Letter of
Transmittal and insert the Unit holder's correct Taxpayer Identification Number
or Social Security Number ("TIN") in the space provided below the signature. The
signature must correspond exactly with the name printed (or corrected) on the
front of this Letter of Transmittal without any change whatsoever. If this
Letter of Transmittal is signed by the registered Unit holder of the Units a
Medallion signature guarantee on this Letter of Transmittal is required.
Similarly, if Units are tendered for the account of a member firm of a
registered national security exchange, a member firm of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States (each an "Eligible Institution"), a Medallion signature
guarantee is required. In all other cases, signatures on this Letter of
Transmittal must be Medallion guaranteed by an Eligible Institution, by
completing the Signature guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
4
<PAGE>
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchasers of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal, together with any required signature guarantees in BOX A,
and any other documents required by this Letter of Transmittal, must be received
by the depositary prior to or on the Expiration Date at its address or facsimile
number set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Unit holders
by execution of this Letter of Transmittal waive any right to receive any notice
of the acceptance of their tender.
2. Transfer Taxes. The Purchasers will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Unit holder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust or a domestic estate (collectively "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Unit holder must provide to the Purchasers the
Unit holder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and
certify, under penalties of perjury, that such Unit holder is not
subject to such backup withholding. The TIN that must be provided is
that of the registered Unit holder indicated on the front of this
Letter of Transmittal. If a correct TIN is not provided, penalties may
be imposed by the Internal Revenue Service ("IRS"), in addition to the
Unit holder being subject to backup withholding. Certain Unit holders
(including, among others, all corporations) are not subject to backup
withholding. Backup withholding is not an additional tax. If
withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
Box C - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to Section 1445 of the Internal Revenue Code, each Unit holder
who or which is a United States Person (as defined Instruction 3 above)
must certify, under penalties of perjury, the Unit holder's TIN and
address, and that the Unit holder is not a foreign person. Tax withheld
under Section 1445 of the Internal Revenue Code is not an additional
tax. If withholding results in an overpayment of tax, a refund may be
obtained from the IRS.
4. Box D - Foreign Persons. In order for a Unit holder who is a foreign
person (i.e., not a United States Person as defined in 3 above) to qualify as
exempt from 31% backup withholding, such foreign Unit holder must certify, under
penalties of perjury, the statement in BOX D of this Letter of Transmittal
attesting to that foreign person's status by checking the box preceding such
statement. However, such person will be subject to withholding of tax under
Section 1445 of the Code.
5. Additional Copies of Offer to Purchase and Letter of Transmittal.
Requests for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from the Purchasers by calling
800-854-8357.
5
Exhibit (a)(3)
<PAGE>
March 25, 1999
TO: UNIT HOLDERS OF U.S. REALTY PARTNERS LIMITED PARTNERSHIP
SUBJECT: OFFER TO PURCHASE UNITS
Dear Unit Holder:
As described in the Offer to Purchase and related Letters of
Transmittal (the "Offer"), MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC;
MACKENZIE PATTERSON SPECIAL FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC;
MACKENZIE PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC. (collectively the
"Purchasers") are offering to purchase up to 183,300 Depositary Unit
Certificates of limited partnership interest (the "Units") in U.S. REALTY
PARTNERS LIMITED PARTNERSHIP, a South Carolina limited partnership (the
"Partnership") at a purchase price equal to:
$5.00 per Unit
The Offer will provide you with an opportunity to liquidate all, or a
portion of, your investment in U.S. REALTY PARTNERS LIMITED PARTNERSHIP without
the usual transaction costs associated with market sales or partnership transfer
fees.
After carefully reading the enclosed Offer, if you elect to tender your
Units, mail (using the enclosed pre-addressed, postage paid envelope) or
telecopy a duly completed and executed copy of the Letter of Transmittal (the
green form) and Change of Address forms, an endorsed certificate (if you have a
certificate for your Units) and any other documents required by the Letter of
Transmittal, to the Depositary for the Offer at:
MacKenzie Patterson, Inc.,
1640 School Street
Moraga, California 94556
Telecopy: (925) 631-9119
If you do not have a certificate for your Units, return the other
documents and so note on your Letter of Transmittal. If you have any questions
or need assistance, please call the Depository at 800-854-8357.
This Offer expires (unless extended) April 29, 1999
1
Exhibit (a)(4)
<PAGE>
This announcement is neither an offer to buy nor a solicitation of an offer to
sell Units. The Offer is being made solely by the formal Offer to Purchase
forwarded to Unitholders of record and is not being made to, nor will tenders be
accepted from or on behalf of, Unitholders residing in any jurisdiction in which
making or accepting the Offer would violate that jurisdiction's laws. In those
jurisdictions where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchasers only by one or more registered dealers licensed under the
laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH UP TO 183,300
DEPOSITARY UNIT CERTIFICATES OF LIMITED PARTNERSHIP INTEREST
OF U.S. REALTY PARTNERS LIMITED PARTNERSHIP AT $5.00 PER UNIT
by
MP VALUE FUND 4, L.P.; MP VALUE FUND 6, LLC; MACKENZIE PATTERSON SPECIAL
FUND, L.P.; MACKENZIE PATTERSON SPECIAL FUND 3, LLC; MACKENZIE
PATTERSON SPECIAL FUND 4, LLC; and CAL KAN, INC (collectively the "Purchasers")
The Purchasers are offering to purchase for cash up to 183,300 Depositary Unit
Certificates of limited partnership interest of U.S. Realty Partners Limited
Partnership ("Units") at $5.00 per Unit upon the terms and subject to the
conditions set forth in Purchasers' Offer to Purchase and in the related Letter
of Transmittal (which together constitute the "Offer" and the "Tender Offer
Documents"). THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, PACIFIC
DAYLIGHT TIME, ON APRIL 29, 1999, UNLESS THE OFFER IS EXTENDED.
Funding for the purchase of the Units will be provided through the
Purchasers' existing working capital. The Offer will expire at 12:00 midnight,
Pacific Standard Time on April 29, 1999, unless and until Purchasers, in their
sole discretion, shall have extended the period of time for which the Offer is
open (such date and time, as extended the "Expiration Date"). If Purchasers make
a material change in the terms of the Offer, or if they waive a material
condition to the Offer, Purchasers will extend the Offer and disseminate
additional tender offer materials to the extent required by Rules 14d-4(c) and
14d-6(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The minimum period during which an offer must remain open following any
material change in the terms of the Offer, other than a change in price or a
change in percentage of securities sought or a change in any dealer's soliciting
fee, will depend upon the facts and circumstances including the materiality of
the change with respect to a change in price or, subject to certain limitations,
a change in the percentage of securities ought or a change in any dealer's
soliciting fee. A minimum of ten business days from the date of such change is
generally required to allow for adequate dissemination to Unitholders.
Accordingly, if prior to the Expiration Date, Purchasers increase (other than
increases of not more than two percent of the outstanding Units) or decrease the
number of Units being sought, or increase or decrease the consideration offered
pursuant to the Offer, and if the Offer is scheduled to expire at any time
earlier than the period ending on the tenth business day from the date that
notice of such increase or decrease is first published, sent or given to
Unitholders, the Offer will be extended at least until the expiration of such
ten business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Pacific Standard Time. In all cases
payment for the Units purchased pursuant to the Offer will be made only after
timely receipt of the Letters of Transmittal (or facsimiles thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by such Letters of Transmittal.
Tenders of Units made pursuant to the Offer are irrevocable, except that
Unitholders who tender their Units in response to the Offer will have the right
to withdraw their tendered Units at any time prior to the Expiration Date by
sending a written or facsimile transmission notice of withdrawal to Purchasers
specifying the name of the person who tendered the Units to be withdrawn. In
addition, tendered Units may be withdrawn at any time on or after May 24, 1999,
unless the tender has theretofore been accepted for payment as provided above.
If tendering Unitholders tender more than the number of Units that Purchasers
seek to purchase pursuant to the Offer, Purchasers will take into account the
number of Units so tendered and take up and pay for as nearly as may be pro
rata, disregarding fractions, according to the number of Units tendered by each
tendering Unitholder during the period during which the Offer remains open.
1
<PAGE>
The terms of the Offer are more fully set forth in the formal Tender Offer
Documents which are available from Purchasers. The Offer contains terms and
conditions and the information required by Rule 14d-6(e)(1)(vii) under the
Exchange Act which are incorporated herein by reference. The Tender Offer
Documents contain important information which should be read carefully before
any decision is made with respect to the Offer. The Tender Offer Documents may
be obtained by written request to Purchasers or as set forth below. A request
has been made to the Company pursuant to Rule 14d-5 under the Exchange Act for
the use of its list of Unit holders for the purpose of disseminating the Offer
to Unit holders. Upon compliance by the Company with such request, the Tender
Offer Documents and, if required, other relevant materials will be mailed to
record holders of Units or persons who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Units.
For Copies of the Tender Offer Documents Call Purchasers at 1-800-854-8357
or Make a Written Request Addressed to 1640 School Street, Moraga, California
94556
March 25, 1999
2
